Appraisal: Oliver v. State Farm Fire & Casualty Ins. Co.

The Minnesota Supreme Court recently overturned a Court of Appeals of Minnesota decision from 1985, ruling that the Minnesota Uniform Arbitration Act does not apply to appraisal awards. In David A. Brooks Enterprises Inc. v. First Systems Agencies, the Court of Appeals ruled the agreement to an appraisal in an insurance policy was included in the Uniform Act’s definition of an agreement to arbitrate. 370 N.W.2d 434 (1985). The Supreme Court differentiated an agreement to appraisal from an agreement to arbitrate, stating that an appraisal is limited in scope as to only binding on the amount of loss, while arbitration is a final, binding judgement on all matters. The result is that pre-judgment interest on the appraisal award was not automatically available to the insured as it would have been under the Uniform Act, and remanded the case to the trial court to determine if prejudgment interest was warranted in this case.